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Job cuts grind to halt
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November 8, 1999: 12:10 p.m. ET
October cuts plunge 63%, indicating high demand for workers
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NEW YORK (CNNfn) - Job cuts at U.S. companies plunged more than 63 percent in October -- a reflection of the red-hot employment market and the fact that employers can't afford to let go of their workers, a private report released Monday showed.
Some 22,814 positions were shed by various companies last month, according to the employment firm Challenger, Gray & Christmas, significantly less than September's 61,219 and well below the 91,531 cuts recorded a year earlier. Most of the cuts occurred in the aerospace, defense and financial services areas of the economy.
The numbers confirm what various statistical reports released by the government have already suggested -- that the pool of available workers is shrinking at the same time that employers are finding it necessary to maintain or expand their work forces. The economy generated 310,000 new jobs in October, while the unemployment rate slid to a near 30-year low of 4.1 percent.
"Human resource executives and low-tech industries are at their wits' ends trying to find skilled personnel," said John Challenger, chief executive of the Chicago-based agency, adding that retailers -- who have been shedding jobs through most of 1999 -- will be the most hard-pressed to find staff for the upcoming holiday shopping season.
Retailers' job cuts have totaled close to 60,000 so far this year, almost triple the 22,780 cuts announced in that sector in 1998. Computer companies rang in a close second, with 55,608 job cuts year-to-date.
Even with October's dramatic plunge, job cuts are still high and poised to surpass last year's totals, Challenger said. For 1998, job cuts in the U.S. totaled 677,495, according to the firm's research. Year to date, 579,543 job cuts have been announced by U.S. firms.
For financial market observers, job cuts offer a double-sided picture. On the one hand, fewer employed people means a reduction in the overall labor force and a slowdown in economic growth -- something Federal Reserve policy makers have been trying to achieve.
On the other hand, job cuts related to overlapping departments and positions within two joining companies tend to streamline operations and make firms leaner and meaner. That tends to lift corporate profits in the long term and contribute more to the economy. Fed officials next meet Nov. 16 to discuss monetary policy.
Job cuts were most prominent in the East last month, where 12,833 positions were eliminated, mostly in New York state. The Midwest played runner-up with 4,412 job cuts, mostly in Illinois. Colorado led the West and Southwest, where 3,830 positions were eliminated last month, and Tennessee led the South, where 1,739 positions were cut.
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